Full text of Raju's resignation letter to the Board

To

     The Board of Directors,

  Satyam Computers Services Ltd. 

    From

    B. Ramalinga Raju,

    Chairman,

    Satyam Computer Services Ltd 

Dear Board Members, 

It is with deep regret, and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice: 

1. The balance sheet carries as of September 30, 2008 

a) Inflated (non-existent) cash and bank balance of Rs 5,040 crore (as against Rs 5361 crore refglected in the books) 

b) An accured interest of Rs 376 crore which is non-existent 

c) An understated liability of Rs 1,230 crore on account of funds arranged by me 

d) An over stated debtor position of Rs 490 crore (as against Rs 2651 reflected in the books) 

2. For the September quarter (Q2) we reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24 per cent of revenues) as against the actual revenues of Rs 2,112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue). This has resulted in artificial cash and bank balances going up by Rs 588 crore in Q2 alone. 

The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several  years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of the company operations grew significantly (annualized revenue run rate of Rs 11,276 crore in the September quarter, 2008 and official reserves  of Rs 8.392 crore). The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional  resources and assets to justify higher level of operations – thereby significantly increasing the costs. 

Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten. 

The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas’ investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam’s problem was solved, it was hoped that Maytas payments can be delayed. But that was not to be. What followed in the last several days is common knowledge. 

I would like the board to know: 

1. That neither myself, not the Managing Director (including our spouses) sold any shares in the last eight years-excepting for a small proportion declared and sold for philanthropic purposes. 

2. That in the last two years a net amount of Rs 1,230 crore was arranged to Satyam (not reflected in the books of Satyam) to keep the operations going by resorting to pledging all the promoter shares and raising funds from know sources by giving all kinds of assurances (Statement enclosed, only to the members of the board). Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of most of the pledged share by the lenders on account of margin trigger. 

3. That neither me, nor the Managing Director took even one rupee/dollar from the company and have not benefitted in financial terms on account of the inflated results. 

4. None of the board members, past or present, had any knowledge of the situation in which the company is placed. Even business leaders and senior executives in the company, such as Ram Mynampati, Subu D T R Anand, Kesab Panda, Virender Agarwal, A S Murthy, Hari T, S V Krishnan, Vijay Prasad, Manish Mehta, Murali V, Sriram Papani, Kiran Kavale, Joe Lagioia. Ravindra Penu Metsa, Jayaraman and Prabhakar Gupta are unaware of the real situation as against the books of accounts. None of my or managing directors immediate or extended family members has any ideas about these issues. 

Having put the facts before you, I leave it to the wisdom of the board to take the matters forward. However, I am also taking the liberty to recommend the following steps: 

1) A task force has been formed in the last few days to address the situation arising out of the failed Maytas acquisition attempt. This consists of some of the most accomplished leaders of Satyam: Subu D, T R Anand, Keshab Panda and Virender Aggarwal, representing business functions, and A.S.Murthy, Hari T and Murali V representing support functions. I suggest that Ram Mynampati be made the Chairman of this task force to immediately address some of the operational matters on hand. Ram can also act as an interim CEO reporting to the board. 

2) Merrill Lynch can be entrusted with the task of quickly exploring some merger opportunities. 

3) You may have a ‘restatement of accounts’ prepared by auditors in light of the facts that I have placed before you. 

I have promoted and have been associated with Satyam for well over twenty years now. I have seen it grow from few people to 53,000 people, with 185 Fortune 500 companies as customers and operations in 66 countries. Satyam has an excellent leadership and competency base at all levels. I sincerely apologize to all Satyamites and stakeholders who have made Satyam a special organization, for the current situation. I am confident they will stand by the company in this hour of crisis. 

In light of the above, I fervently appeal to the board to hold together to take some important steps. Mt T R Prasad is well placed to mobilize support from the government at this crucial time. With the hope that members of the Task Force and the financial advisor, Merrill Lynch (now Bank of America) will stand by the company at this crucial hour, I am marking copies of this statement to them as well. 

Under the circumstances, I am tendering my resignation as the chairman of Satyam and shall continue in this position only till such time the current board is expanded. My contribution is just to ensure enhancement of the board over the next several days or as early as possible. 

I am now prepared to subject myself to the laws of the land and fact the consequences thereof. 

(B. Ramalinga Raju) 

Copied marked to: 
1) SEBI Chairman 
2) Stock Exchanges

 

Raju brothers to be produced before court within 24 hours: Police

HYDERABAD: The tainted founder of Satyam B Ramalingam Raju and his brother Rama Raju will be produced before the court within 24 hours, a top police official said.  "Both are in our custody... a case has been registered and we will produce them before the court within 24 hours," Director CB-CID V S Kaumudi told reporters outside the Director General of Police's office.  Kaumudi said they would seek police custody of the brothers when they are produced before the court tomorrow. He said they were arrested on the bases of a complaint filed by an investor. Kaumudi said they came to the DGP'S office and they have been arrested in connection with the business of the Satyam Computers.  "They are now in CID custody and they will be produced before the court sometime tomorrow," he said.  Mr Ramalinga Raju, Satyam's disgraced chairman, along with former MD Mr Rama Raju, was arrested late Friday night, two days after he confessed to perpetrating a Rs 7,000-crore financial fraud.  The CID had registered a case against Mr Raju based on his confessional letter to the Satyam board and SEBI. The Raju brothers have been booked for criminal breach of trust, cheating, criminal conspiracy and forgery under the Indian Penal Code.  Late night meetings were still on at the government level to finalise a new board for Satyam. Names doing the rounds include former Nasscom president Kiran Karnik, former SEBI chairman M Damodaran, former MphasiS chief Jerry Rao and angel investor Saurabh Srivastava.  With the government's decision on Friday, the board meeting of Satyam scheduled for Saturday will not take place. As per law, the new board will hold its first meeting within seven days, the minister added. The government's decision came as it was concerned about the future of the company and its stake holders including employees

Others may curse Ramalinga Raju; his village blesses him

ELURU/AP: For the whole world B Ramalinga Raju may be a villain, after the startling revelation of fraud in the company he founded, but for  residents of his native village in West Godavari district, he is still a good samaritan.  The non-descript village, Garagaparru, shot into the limelight with Satyam Computer growing to become the fourth largest IT firm in the country.  The villagers hail the development works undertaken by the Byrraju Foundation, the charitable arm of Satyam, and consider Raju as a good man.  "He has done many development works in this region. We hope he will tide over the present crisis," Rama Raju, a villager said.  Several other villagers have expressed similar feelings. The Satyam issue is the hot topic in the village ever since Raju tendered his resignation as chairman of the company.  The Byrraju Foundation has taken up a number of development work in the fields of education, health, drinking water and several others in hundreds of villages in the coastal districts of West Godavari, East Godavari, Krishna, Visakhapatnam and others. However, the developments in the company came as a shock to hundreds of shareholders in the West Godavari district.  "I have lost Rs 64,000. Many others in the town too lost large amounts," a shareholder in Eluru, who refused to be named, said.

We are All support for Raju

He may have a few friends left among his board of directors. And the market grapevine is that many of his once-trusted lieutenants may jump the ship at the first sight of a new pasture. But this does not make Ramalinga Raju, the founder chairman of Satyam Computer Services Ltd (SATYAM.BO : 23.85 -16.1), which has been in the news for all the wrong reasons in recent days, without company. Now, Raju aficionados have gone that extra mile to launch a dedicated website, www.ramalingaraju.com, for their besieged hero. No doubt when the company is under legal scrutiny, this is more of a support-gaining exercise or tricks by the crisis management team. Though the company spokesperson maintained the portal was not developed by any present or former employee of Satyam, it is learnt that it was designed and uplinked by a very close relative of Ramalinga Raju. It starts with Dear Ramalinga Raju Garu, we are all with you @ any point of time....

and our respects and confidence remain the same even today... You are still a hero among all of us and would always remain one no matter what anyone says. It has a welcome site which talks about the initiative to launch this portal. It took 21 long years for someone to build an empire and reputation and today we stand a great chance of losing momentum... can the media houses and critics build an empire by giving direct employment to over 50,000 people? The messages would give some insights into the mindset of the Raju fundamentalists . They make for a heady cocktail of hero worship, regionalism, sycophancy and what not. For some, he is Satyam itself, for some others he is an icon, a king, a hero, a social worker par excellence, godfather and god itself. Sample this: Sir, you have out grown the reach of the so called big wigs of today s world with your noble deeds like Bryraju Foundation and 108 Helpline. Your achievements spill in volumes for me even to recollect. I can only say, Sir you came, you saw and you conquered not only the software business but our hearts of the common man, you are now Ramilinga Raju the people s man. We are all behind you in this need of the hour (sic) to see you as the winner and please do remember your victory is our victory. We salute you, sir . There are other postings blasting Raju detractors, including scribes and those cowards of a directors who had chosen to abandon the visionary in his hour of crisis. This is not to say some messages do dub the deal as maytas tsunami , but still hold Raju in high esteem. Yes Ramalingaraju is the one person who can bring back the glory of the company again. As a human being it s quite possible to take some wrong decisions. One way the decision took by Raju can be called as ridiculous but at the same time he alone can t be blamed for this issue. All the members who approved this will be responsible for this maytas tsunami. Some others advise the media and analysts to stop speculations about Raju s fate. Here is one that takes the cake: Stop speculations Satyam is Raju and Raju is what Satyam. there is no question about that ...one cant imagine Satyam without Raju....such a nice person . Here is another pearl of wisdom from a staunch Raju fan (all written in bold, italics and caps): Heated gold becomes ornament, beaten copper becomes wires. Deflected stone becomes statue. So the more pain get in life you become more valuable.... Thats what Satyam and Ramalingaraju. We are with you, we trust you, we are proud of you ... The member club has Megasoft CEO GV Kumar too, who writes that Ramalinga Raju is a visionary and a great doyen of Indian business and IT industry in particular. It s rather unfortunate that an entrepreneur and business-builder like him is being castigated for this just one single, aborted step, (right or wrong) after all these years of stellar leadership and contribution to the industry and the society. He remains a great man and respected figure to look up to for me and will continue to be so in the future. I request all to pause a bit and put an end to this unnecessary vilification and allow him to do what he did best and will do best i.e. build the company further. Lot of them are not realising the ripple effect which can be caused by letting this team down, people like these who can build companies like Satyam, EMRI 108, Byrraju Foundation are extremely rare, thousands of families are surviving on companies created by him directly or indirectly today, it s an economy by itself where even the country is being benefited through tax earnings and employment creation, and the social service which was an initiative by the same could also be effected. One gentleman says in his message: Who is more valuable to the public or nation? Is it one who serves 100% and has only 8% stake and distributing the rest of 92% to the public or nation? Or one who holds a substantial stake and distribute a mere loot to the public or nation? The messages in defence and praise on the website run into several hundreds. Whatever his fate be, going by the high drama now unfolding on the worldwide web, Raju may give stiff competition to the likes of SRK and MS Dhoni in commanding brand loyalty. As a cynic was heard saying, Satyam as a brand has taken a strong beating, but the brand Raju has been rising on the popularity chart .

Satyam's Raju brothers arrested by AP Police

HYDERABAD: The Satyam Computer Services drama reached its climax on Friday evening with its promoters B Ramalinga Raju and B Rama Raju arrested by the Andhra Pradesh police and the Central government taking control at the tainted firm.  "We have arrested both Ramalinga Raju and Rama Raju based on a complaint registered by the Criminal Investigation Department. We have initiated legal action and anyone who is guilty will be punished," said Andhra Pradesh DGP SS Yadav.  Mr Ramalinga Raju, Satyam's disgraced chairman, along with former MD Mr Rama Raju, was arrested late Friday night, two days after he confessed to perpetrating a Rs 7,000-crore financial fraud. The CID had registered a case against Mr Raju based on his confessional letter to the Satyam board and SEBI. The Raju brothers have been booked for criminal breach of trust, cheating, criminal conspiracy and forgery under the Indian Penal Code.  Friday evening saw the corporate affairs ministry stepping in to salvage Satyam by replacing its existing board of directors with 10 government-appointed directors. The move is aimed at preventing the existing board from tampering with evidence and to ensure the company continues its operations uninterrupted by an ongoing probe into the scam.  Corporate affairs minister Prem Chand Gupta told reporters late evening that the Company Law Board (CLB) has given an interim order to restrain Satyam's directors from acting in their board positions. "On the government's petition, the CLB has also allowed the Central government to appoint 10 nominees to function as directors of the company," Mr Gupta told journalists. ET had first reported the government's plan to nominate directors on Satyam's board on January 8.  Late night meetings were still on at the government level to finalise a new board for Satyam. Names doing the rounds include former Nasscom president Kiran Karnik, former SEBI chairman M Damodaran, former MphasiS chief Jerry Rao and angel investor Saurabh Srivastava.

How does a balance sheet reflects a co's finances?

Acompany’s balance sheet is essentially a statement of its wealth (assets) and what it owes to others (liabilities) at a particular point in time. The assets could be fixed assets like land, buildings, plant and machinery. They could be movables like cars or computers.

They could also be liquid assets in the form of cash reserves or receivable payments due to the company from those it has sold goods to, for instance, or repayments on loans given. Liabilities are anything the company has to pay to others. Thus, they would include payments due to its suppliers.

Loans taken from others as well as interest due on those loans would also be part of the liabilities. What is owed to the shareholders would also fall in this category.

However, balance sheets present this information not explicitly under the heads assets and liabilities, but rather as a statement that gives sources of funds on top and application of funds below. All sources of funds effectively constitute liabilities. Share capital and reserves and surpluses form liabilities owed to the shareholder, while loans are liabilities towards others.

The application of funds segment is a listing of the assets, except for one entry, which is current liabilities and provisions. The gross value of assets , minus the current liabilities, gives the figure for net current assets. Net current assets must be equal to total figure at the end of the sources of funds segment. This also means that net assets and net liabilities are always equal, hence the term balance sheet.

Application of funds includes value of fixed assets, of current assets (like receivables or inventories ) as well as investment. Entries in the balance sheet are explained in more detail in annexed schedules. In fact, to make the most of a balance sheet, it is important to look at these schedules closely.

To begin with, a balance sheet in itself cannot adequately tell us whether a company is in sound financial health or not. For that, we must also look at balance sheets for earlier years as well as profit and loss accounts of the company. This is because while a balance sheet presents the picture of the company’s finances at a particular point in time, the profit and loss account tells us how the company has performed over a period of time—a quarter, half-year or full year. Thus, a company may have considerable assets, but that may be a result of good performance in past years, while it may be doing badly at present. Or, it may have accumulated liabilities from bad performance in the past, but may have turned the corner and started doing very well.

Looking at the situation at one specific date will no tell us which of these is true. Looking at the current position (balance sheet) and the performance over a year (P&L account) will obviously tell us more. Subject to those caveats, a balance sheet itself can give significant pointers to the financial health of a company. For instance, while assets and liabilities will match in every balance sheet, a company whose liabilities are primarily to its shareholders is clearly better placed than one which owes a lot to the rest of the world.

The P&L account details the income and expenditure of the company over a quarter, half-year or year. Unlike a balance sheet, income and expenditure of course need not be balanced. Where income exceeds expenditure, the account will show a profit, where the reverse is true, we have a loss. Expenditure includes not just operating cost like inputs and wages, but also provisions that the company has to make for depreciation of its fixed assets, for interest on loans, dividend payable to shareholders and tax.

Thus, we have several different figures for profit. The first stage is operating profit that tells us whether the company is able to sell its products at higher than cost and by how much. Then, we have profit after depreciation or profit before tax (PBT).

While depreciation does not actually involve any cash outgo, the reason it is counted as if it is an expenditure , is because depreciating assets will ultimately have to be replaced. Companies are happy to have high depreciation rates, since it saves them tax the profit that is taxable is profit after depreciation. Next comes the provision for tax, giving us the profit after tax (PAT), which is also normally known as net profit, though in some cases there might be some other extraordinary provisions which give a lower figure for net profit.

Not necessarily. They might indicate a company that has not very bright prospects in future.

Normally a highly profitable company that sees the prospect of future growth would be using its reserves to invest in expansion rather than letting cash idle in bank accounts.

However, this is only a thumb rule, since investment tends to be lumpy. So it could be that cash reserves are huge at the moment, because the company is building up to a big investment sometime soon.

Can Satyam pay salaries to staff?

CHENNAI: A legendary entrepreneur overstated his company’s assets and understated the liabilities. Many clients who had reposed their trust in 

Employees of Satyam Five facts about Satyam Top Accounting scandals

Satyam may feel cheated and might walk away. In the hypothetical scenario of Satyam facing a zero-revenue and zero-account receivables situation starting today, how long would it be able to pay its 53,000 employees? 

The ‘fudged’ cash and bank balances could have lasted them 10 months but Ramalinga Raju has already confessed on Wednesday that Rs 5,040 crore out of the Rs 5,361 crore is non-existent. 

Satyam pays Rs 522 crore in salaries and bonuses on an average per month, according to its last quarterly financial update. Along with this, it also pays a smaller amount of roughly Rs 10 crore in staff welfare and employee stock compensation expenses per month. 

If you include items such as reimbursements for travel, communication and other personnel-related expenses - the monthly outgo for salaries would amount to Rs 580 crore. 

Now with Raju stating that it had an actual cash and bank balance of only Rs 320 crore at the end of September 30, 2008 itself, this means Satyam could have practically paid a month’s salary or so at the most. But four months have passed since then and this is why there is more than a question mark on whether Satyam employees would be paid their monthly remuneration for January 2009. 

“All the records were fudged. To find out whether something is at all left with Satyam, we need a full restatement of accounts. At this point, it is well nigh impossible to find out whether Satyam has any cash left with it, or not,” IT analyst Harit Shah of Angel Broking said. 


Raju, in his 5 page confession, has already accepted that an amount of Rs 1,230 crore was arranged to Satyam to keep operations in the last two years. 

“This was done by way of pledging shares and raising funds from sources. This could mean that not only was the money paid to Satyamites as salary a loan taken by the promoter group, but also that Satyam’s own resources would in all probability be extinguished,” says an industry source. 

Without cash, Satyam promoters apparently arranged for working capital by taking loans. Now with Ramalinga Raju and his men leaving the company in doldrums, how and more importantly, who will raise fresh loans to keep paying salaries is the million dollar question.

Satyam CFO Srinivas Vadlamani attempts suicide: Sources

HYDERABAD: Srinivas Vadlamani, the chief financial officer of Satyam, who is also allegedly involved in the IT company’s financial fraud, attempted suicide early this morning, say market sources. He is, however, safe, sources add. 

Disgraced former Satyam chairman Ramalinga Raju in his letter of resignation to Securities and Exchange Board of India (Sebi) and the company’s board of directors admitting fraud, had not absolved the CFO. 

A Satyam spokeswoman however categorically denied that the CFO had attempted to take his life. But she was unable to say where the CFO could be found. "We don’t know where he is," she said. 

According to Satyam employee Vadlamani had not attempted to take his life. "Undoubtedly he is under severe pressure but we were told in the office that he is cooperating with the officials of Sebi who are now investigating our company's matters," said a senior manager of Satyam. But he replied in the negative when asked if he had seen Vadlamani today in office. 

Vadlamani’s name is the only significant one missing from Raju's list of those who were ‘unaware of the real situation’ and the IT company’s wrong-doings. 

Interim CEO Ram Mynampati in a press conference on Thursday said that Vadlamani had put in his papers. The decision on his resignation is to be taken in board’s meeting on January 10. 

The CFO has been absconding from his home in downtown Malkajgiri for the last two days. 

He is said to have attempted suicide in the house of some relative in Ameerpet area, sources said. 

Confirmation from the police about the incident is still awaited. 

Satyam achieved top award for internal audit

MUMBAI: Satyam, whose chairman on Wednesday admitted to serious financial frauds over several years, was (ironically) awarded one of the top global awards for its internal audit practices. In 2006, Satyam's internal audit team was awarded the recognition of commitment (RoC) award from The Institute of Internal Auditors, USA.  "The RoC award is the upper most recognition for an internal audit department confirming the company's commitment to best practices and highest quality standards," the Hyderabad-headquartered company had said in its February 7, 2006 press release. "Satyam is only the third company in India to achieve the coveted award from IIA," it added. The institute has presence in India through its six chapters in six major

Govt orders inspection of 8 Satyam subsidiaries

NEW DELHI: The government on Thursday ordered probe into the books of accounts of eight subsidiaries of the Satyam Computer Services, whose head B Ramalinga Raju admitted that the company was declaring forged accounts.  The inspection would be conducted as per the provisions of section 209A of the Companies Act, corporate affairs minister Prem Chand Gupta told reporters on Thursday.  The subsidiaries, whose accounts will be verified by the government, are Maytas Properties, Maytas Infrastructure, Satyam BPO, Nipuna Services, Knowledge Dynamics, Nitor Global Solutions, Ca Satyam ASP and Satyam Venture Engineering Services.

Satyam a failure of governance: Narayan Murthy

BANGALORE: At a time when India software Inc is waking up to perhaps the biggest corporate scam the country has seen, industry leaders such as N R Narayan Murthy who founded country's second biggest tech firm Infosys, described developments at Satyam as shocking, painful and a good warning for other companies in the sector.  The Satyam episode is a good warning signal for all managements, said Mr Narayan Murthy, the non-executive chairman of Infosys and one of the strongest votaries of corporate governance in the country. Speaking to ET, Mr Murthy said, it is time for authorities to step in with appropriate action.  Following is Mr Murthy's unedited views on the subject.  I am shocked and painfully dismayed at what has happened at an important software company in India. It is a total failure of governance. I only hope that relevant authorities get to the bottom of this and take appropriate action.  It is important to remember that one Satyam does not make the entire Indian software industry. I believe it is an isolated case. I want foreign investors to realise that there are many honest managements and good companies in this country. While what has happened at Satyam is totally regrettable, I believe that it does not represent India. It just represents one individual and one company.  In the short term, investors will start looking deeper into all companies they want to invest in, and rightly so. Once they realise that things are not all that bad and that most companies are decent and managements honest, they will regain their faith.  This too will pass. Investors will consider this as an extreme case. Right now, all of us must conduct ourselves in the most legal and ethical manner. It is a good warning signal for all managements.

Raju's letter on shareholding misleading

NEW DELHI: In his letter to the Satyam board, Ramalinga Raju asserted that "neither myself, nor the managing director (including our spouses) sold any shares in the last eight years — excepting for a small proportion declared and sold for philanthropic purposes". The idea clearly was to suggest that the promoters of Satyam have not sold the company's shares for several years and hence have not benefited from artificially inflating the share price by overstating performance.  In fact, in the same letter, Raju reiterated the point by saying: "Neither me, nor the managing director took even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results".  Despite the apparently candid admissions in the letter, this particular claim seems to be quite misleading. This is established by a closer look at the change in shareholding in Satyam from March 2001 onwards, details of which are available on the BSE website.  As on March 31, 2001, the promoter group's holding was about 7.2 crore shares, which was then 25.6% of the total shares of the company. Raju, his wife Nandini, his brother and MD B Rama Raju and the MD's wife Radha between them owned a little under 2.9 crore shares or about 10.3%.  Over the next few years till March 2006, the promoters' shareholding came down to about 14%, partly because the total equity base of the company was slowly expanding for reasons like conversion of stock options and partly because the promoters continued to sell small portions of their holdings. The holding of the two brothers and their spouses remained more or less the same.  By June 2006, the promoters' holding had fallen dramatically to 8.2% of the total equity or from 4.5 cr shares to 3 cr shares. In other words, the promoters (read the Raju family) sold roughly 1.5 cr shares. During that period the average share price of the company was in the range of Rs 700. That means the family would have realized something of the order of Rs 1,000 cr from the sale of its shares. Put that beside the fact that Satyam's share price on Wednesday was down to below Rs 40 and even before the current scandal broke, in mid-December last year, was only at about Rs 225 and it becomes difficult to accept that the Rajus have not gained at all from inflated results.

Satyam faces class action lawsuit in US

WASHINGTON: A US law firm has filed class action law suit against Satyam Computer Services Ltd in a New York court on behalf of those who purchased the Indian company's American Depository Receipts over the last five years.  The complaint by the law firm of Izard Nobel LLP in the district court for the Southern District of New York charges the fallen Indian outsourcer and certain of its executives of violating federal securities laws by issuing materially false and misleading statements.  After Wednesday's admission by the Company's CEO B Ramalinga Raju of a "multi-year" fraud in which Satyam's financial accounts and disclosures were systematically falsified, "the Company's ADRs fell $8.42, or 90%, prior to the opening of the New York Stock Exchange," it noted.  Trading in Satyam Computer Services Ltd was halted on the New York Stock Exchange ahead of the market's open Wednesday.  The stock exchange said its regulators were evaluating news related to India's fourth-largest software company, with its shares halted until further notice.  The New York Times citing analysts said the revelations by the company's founder "could cause a major shake-up in India's enormous outsourcing industry and may force many large companies to investigate and perhaps revamp their back offices.  "This development is going to have a major impact on Satyam's business with its clients," it cited analysts with Religare Hichens Harrison as saying. In the short term "we will see lot of Satyam's clients migrating to competition like Infosys, TCS and Wipro," they said.  Satyam serves as the back office for some of the largest banks, manufacturers, health care and media companies in the world, handling everything from computer systems to customer service. Clients have included General Electric, General Motors, Nestlé and the United States government.  In some cases, Satyam is even responsible for clients' finances and accounting, the Times noted.  In a commentary titled "Satyam's Feet of Clay" the Wall Street Journal said: "Voting with your feet isn't the best way to enforce strict corporate governance. Yet for shareholders in many of India's family-controlled companies, it is the only option."  Noting that investors fled Satyam Computer Services in December after it planned to buy two property companies part-owned by its founders, the Journal said: "Wednesday's disclosure that the deals were a last-gasp attempt to plug a hole in the firm's finances, inflated for years by Chairman Ramalinga Raju, underlined how right they were to be scared."  "The affair -- dubbed India's Enron -- spotlights India's corporate governance," wrote commentator Mohammed Hadi. "That Mr Raju tried spending $1.6 billion on firms unrelated to Satyam's business and in which he had an interest, without shareholder approval, shows what he thought investors would tolerate."  Governance watchers aren't hopeful that the new level of scrutiny will endure, but legal changes would help, he said citing the example of Hong Kong which has made it mandatory to count proxy votes on shareholder resolutions at annual meetings.

Satyam aims to continue business, protect staff

HYDERABAD: Beleaguered Satyam on Thursday embarked on a major damage control exercise to pull itself from the brink, pushed to by founder

A press conference after the resignation of Ramalinga Raju, at Satyam campus in Hyderabad. 

HYDERABAD: Beleaguered Satyam on Thursday embarked on a major damage control exercise to pull itself from the brink, pushed to by founder 

A press conference after the resignation of Ramalinga Raju, at Satyam campus in Hyderabad. (TOI Photo)

Ramalinga Raju, saying arranging liquidity, assuaging fears of 53,000 employees and continuing the existing business would be its top priority. 

Not ruling out initiating action against Raju or the auditors PwC for its complicity in fudging of accounts, the acting CEO Ram Mynampati said every possible action would be considered against Raju, who quit as chairman after making startling revelations on corporate India's biggest fraud entailing about Rs 7,800 crore.

Ramalinga Raju, saying arranging liquidity, assuaging fears of 53,000 employees and continuing the existing business would be its top priority. ( Watch )

Not ruling out initiating action against Raju or the auditors PwC for its complicity in fudging of accounts, the acting CEO Ram Mynampati said every possible action would be considered against Raju, who quit as chairman after making startling revelations on corporate India's biggest fraud entailing about Rs 7,800 crore.

Aimed at preventing panic exodus of highly talented workforce and top management, the interim CEO said that the December'08 salaries has been paid and the management would be focusing on arranging funds, which at the present juncture was a cause for concern.

"We do not rule out recommending action against Ramalinga. Many actions are possible for Satyam's future," he said, adding that the company was not aware of his whereabouts amid reports that the disgraced founder of the country's fourth largest IT company had left for the US yesterday before the news of his resignation and disclosure became public.

On the auditor PriceWaterhouseCoopers who have been authenticating year after year the company's accounts, which Raju admitted to fudging by inflating profits and creating fictitious assets, Mynampati said: "We have not verified what process PwC took to certify financial statement. We are not yet in touch with PwC."

In the middle of the press conference held by the interim management at Satyam's headquarters here, CFO Valdamani Srinivas, who is the financial custodian of the company, sent in his resignation but Mynampati said the Board would decide on it on January 10 and anyway he has to serve notice period.

Interim CEO Ram Mynampati declared that the liquidity and cash-in-hand were not encouraging, although the company managed to pay salaries for December month.

"Some outstanding payment to vendors is yet to be made... we are verifying the liquidity and balance sheet... we have to raise liquidity in near term and are confident of raising it," said Mynampati, while adding that his appointment was legal.

On the financial irregularities disclosed by former Satyam Chairman Ramalinga Raju, Mynampati said the team was not yet in a position to answer these issues, as it is still ascertaining disclosures made by Ramalinga Raju and trying to correct financial irregularities.

He said the regulatory bodies have already started their inspection and a team of market regulator SEBI was in Satyam talking to associates.

He said the company has started to actively reach out to customers globally and has been heartened to receive strong expressions of confidence and Readers react
support from them.

"Our top 100 clients account for 80 per cent of Satyam's revenues," he said, adding that the top priority would be to clear pending contracts and continue with the business as usual.

The company founded by Ramalinga Raju in 1987 received its worst shock yesterday when he disclosed what has now become the country's biggest corporate fraud involving about Rs 7,800 crore.

Satyam is in the process of finding new investment banker as soon as possible to pursue strategic options left with the company and also expand the Board, which is now left with only three members including Mynampati.

Shareholders would be consulted on whatever options there are before the company, he said to a question on whether the company would explore merging or being taken over.

Key brokers boycott Satyam counter

The stock of Satyam Computer Services may be removed from the Sensex, the 30-stock benchmark index of the Bombay Stock Exchange (BSE), after the company’s Chairman and founder Ramalinga Raju today revealed manipulation of its accounts.

While a BSE spokesperson refused to comment, brokers said the stock would hold little interest for investors following this episode. The BSE considers listed history, trading frequency, final rank, market capitalisation weightage, industry/sector representation and track record while selecting Sensex constituents.

“There is a churn in the index after every market boom. So, it is likely that this stock is left out of the Sensex at the next review,” said Gaurav Dua, head of research at Sharekhan. The BSE Index Committee does a periodic review of the Sensex constituents. Shares of Satyam Computers fell 77.69 per cent to close at Rs 39.95 a share in Wednesday’s trading session, taking its market capitalisation down to Rs 2,692 crore.

Meanwhile, even as the drama over Raju’s revelations and resignation unfolded on Wednesday, key brokerages were quick to drop the stock from their coverage.

Several domestic as well as foreign broking houses such as Religare Hichens Harrison, India Infoline, Emkay Global Financial Services and Credit Suisse have suspended coverage of Satyam, citing that the “current financials of the company cannot be relied upon”.

Raju today said the company’s profits had been inflated over the last several years.

“As such, we are unable to issue any further investment advice on Satyam and suspend our coverage of the stock,” said Credit Suisse, which had an underperform rating on the share earlier. Religare Hichens Harrison has gone a step further to say that this development would make Satyam unattractive for any competitor or a private equity player to take over the company.

For Satyam, the long-term outlook remains negative as client and employee attrition would rise significantly in coming quarters due to the adverse impact of the developments. In the short term, a lot of Satyam’s clients would migrate to competitors like Infosys, TCS and Wipro, the brokerage said.

Stocks of Infosys Technologies and Wipro today rose by 1.67 per cent and 0.23 per cent respectively on anticipation that these companies would gain from the business that Satyam was likely to lose.

Domestic brokerage Angel broking called this episode “India’s Enron” and went on to say that apart from the immediate impact, it would have medium-term repercussions in terms of global perception of Indian companies and local and global investor confidence in Indian stock markets.

India Infoline has also dropped the Satyam Computer stock from its coverage with immediate effect. “This episode has the potential of severely dampening FII and FDI sentiment towards India,” said Amar Ambani, Vice-President (Research) at India Infoline.

According to a report from Emkay Global Financial Services, the Satyam episode will lead to high chances of collateral damage to the sector’s premium valuations as well as the Indian market. “We had been arguing over the past few days that Satyam’s ‘low market cap, high cash balance’ was an appeal for both strategic/financial investors given Satyam’s strong offshore capabilities and notable client roster. However, with the damaging revelations from the company, we believe that the argument does not hold any longer. We suspend our rating and target price on the stock,” the Emkay report said.

In Raju's hometown, big panic for small investors

Satyam founder B Ramalinga Raju’s revelations of accounting fraud are giving sleepless nights to small investors in the East and West Godavari districts of Andhra Pradesh.

Investors in West Godavari, Raju’s native district, had bought shares of the company through loans and using their savings of many years. Through the period of enviable growth the company showed, the investments multiplied.

“Many companies have invested in Satyam as well as in Maytas Infra and Maytas Properties (the two companies owned by the Raju family which Satyam proposed to acquire for $1.6 billion) especially from Eluru, Tadepalligudem, Bhimavaram, Tanuku, Palakollu, Narasapuram and Jangareddigudem towns in the two coastal districts through stock-broking firms believing them to give huge returns,” a stock broker told Business Standard, on the condition of anonymity.

According to information available with the stock-broking firms, traditional investors in the East Godavari district trade anywhere between Rs 100 crore and Rs 120 crore every day.

“Of this, Satyam’s share would be about 5 per cent (buying and selling of 50 million shares). With Satyam’s share price plummeting to about 80 per cent yesterday, investors who bought the company’s shares lost about Rs 3.5 crore on a single day, while those who invested between Rs 10 crore and Rs 12 crore and held the stock, lost Rs 7-9 crore. Together, they lost over Rs 10 crore in Satyam yesterday,” the stock broker said.

A worried P Veerabhadra Raju, who owns 5 acres of mango and cashew groves in East Godavari, said, “We never expected the Satyam stock would nosedive for all the wrong reasons.

“I had bought 1,500 shares of Satyam at Rs 480 per share in 2007, thinking that they will offer value for us in the medium to long-term. With yesterday’s disclosures, the share price dropped to Rs 40. I don’t know what will happen and whether to hold the shares or sell them,” he said.

ASN Raju, regional manager (Andhra Pradesh) of Networth Stock Broking, said the traditional investors (approximately 6,000) in these two districts now have no other option left than to wait for the stock price to go up. “And, it is unlikely to happen in the near term,” he said.

Selling the shares seems an unlikely possibility.

Raju family stake in Satyam falls to 2.34%

Satyam Computer Services today said the stake of promoters, Raju family, in the company has dropped to 2.34 per cent following the share sale by lenders, with whom all the promoter's equity has been pledged.

In a disclosure to the National Stock Exchange, Satyam said that SRSR Holdings' stake in Satyam has come down to 2.34 per cent from 3.60 per cent due to the sale of shares pledged by the promoters to lenders for raising funds.

The family of B Ramalinga Raju, who resigned as Satyam Chairman after a shocking disclosure of accounting fraud in the IT major, had held 8.27 per cent through SRSR Holdings at the end of September quarter.

The lenders have sold over 85.30 lakh Satyam shares, which were pledged by the promoters, in open market transactions. After the sale, SRSR Holdings now have 1.57 crore shares representing 2.34 per cent stake in Satyam, which includes over 1.23 crore pledged shares already transferred to lenders, the notification added.

In a week, this is the second time that the lenders have sold their pledged shares. While the promoter holding last week was 5.13 per cent, the sale of shares pledged by the promoters to lenders has brought down the holding to 2.34 per cent.

Last month, the company had said that the promoters had pledged their entire equity holding of 8.61 per cent to the institutional investors which include ICICI Prudential, Aberdeen Asset Management and Fidelity. The institutional investors together hold 60 per cent stake in the IT major.

Satyam embarks on damage control exercise

Beleaguered Satyam today embarked on a major damage control exercise to pull itself from the brink, pushed to by founder Ramalinga Raju, saying arranging liquidity, assuaging fears of 53,000 employees and continuing the existing business would be its top priority.

Not ruling out initiating action against Raju or the auditors Price Waterhouse (PwC) for its complicity in fudging of accounts, the interim CEO Ram Mynampati said every possible action would be considered against Raju, who quit as chairman after making startling revelations on corporate India's biggest fraud entailing about Rs 7,800 crore.

Aimed at preventing panic exodus of highly talented workforce and top management, the interim CEO said that the December 2008 salaries has been paid and the management would be focusing on arranging funds, which at the present juncture was a cause for concern.

"We do not rule out recommending action against Ramalinga. Many actions are possible for Satyam's future," he said, adding that the company was not aware of his whereabouts amid reports that the disgraced founder of the country's fourth largest IT company had left for the US yesterday before the news of his resignation and disclosure became public.

On the auditor Price Waterhouse, who have been authenticating year after year the company's accounts, which Raju admitted to fudging by inflating profits and creating fictitious assets, Mynampati said: "We have not verified what process PwC took to certify financial statement. We are not yet in touch with PwC."

In the middle of the press conference held by the interim management at Satyam's headquarters here, CFO Valdamani Srinivas, who is the financial custodian of the company, sent in his resignation but Mynampati said the board would decide on it on January 10 and anyway he has to serve notice period.

Interim CEO Ram Mynampati declared that the liquidity and cash-in-hand were not encouraging, although the company managed to pay salaries for December month.

"Some outstanding payment to vendors is yet to be made... We are verifying the liquidity and balance sheet... We have to raise liquidity in near term and are confident of raising it," said Mynampati, while adding that his appointment was legal.

On the financial irregularities disclosed by former Satyam Chairman Ramalinga Raju, Mynampati said the team was not yet in a position to answer these issues, as it is still ascertaining disclosures made by Ramalinga Raju and trying to correct financial irregularities.

He said the regulatory bodies have already started their inspection and a team of market regulator Sebi was in Satyam talking to associates.

He said the company has started to actively reach out to customers globally and has been heartened to receive strong expressions of confidence and
support from them.

"Our top 100 clients account for 80 per cent of Satyam's revenues," he said, adding that the top priority would be to clear pending contracts and continue with the business as usual.

The company founded by Ramalinga Raju in 1987 received its worst shock yesterday when he disclosed what has now become the country's biggest corporate fraud involving about Rs 7,800 crore.

Satyam is in the process of finding new investment banker as soon as possible to pursue strategic options left with the company and also expand the board, which is now left with only three members including Mynampati.

Shareholders would be consulted on whatever options there are before the company, he said to a question on whether the company would explore merging or being taken over.

Andhra CM for panel to manage Satyam

Andhra Pradesh Chief Minister Y S Rajasekhara Reddy urged the Prime Minister Manmohan Singh to constitute a management team comprising personalities such as Azim Premji, Narayana Murthy and Ramdorai to manage the affairs beleaguered Satyam Computers Services.

In a letter written to the Prime Minister on Wednesday, Reddy said that his immediate concern was about the fate of the 53,000 employs of Satyam and hence a management team consisting of persons known for their integrity and competence should be constituted so that the interests of the employees and other stakeholders were protected till an alternative credible management was put in place for the company.

He said that today’s revelations of Satyam’s chairman has come as “a grave shock” to everybody.

HIGHLIGHTS: Satyam Press Conference

Salient features of the Satyam Press conference in evening of January 8, 2009

Ram Mynampeti, interim CEO says 

 Shocked by disclosures

 Aim to ensure business continues uninterrupted

 Will work with regulatory bodies closely

Reaching out to customers
Practicing transparency in everything
Outreach to customers, speaking individually to each one

Positively  overwhelmed by each employee's passion
Ascertaining liquidity position and verify Raju's statements

 Reached out to find new board members
In summary we are focused to sustain ops and assuring customers to end this quickly

Committed to strengthening governance

Have not seen huge attrition

Satyam staff member: 
Customers and associates are with us
Customers have shown solidarity

 Q&A

Q: How did the company have only 3% operating margin?
A: We are confronted with this situation for less than 36 hours ago. Most of us are not able to answer such questions. We need to verify the veracity of the statements. What we can say is that we have a good business. We have good visibility on the business we manage and their profitability. None of us have information beyond our groups at this time. We will be in a position to do so after we finish the process.

 Q: How is the company functioning without board members? What happens to Price Waterhouse?
A: To correct you I (Ram Mynampati) am a board member and we have two other directors. So the company can function.When we review info in board meetings, we are presented by audited numbers. We have not yet verified Price Waterhouse's process. We have not been in contact with Price Waterhouse, but we will be. 

Q: What is your working capital policy? What is your whistleblower policy?
A: We have taken care of salaries for December. We have some outstanding payments due to vendors. The liquidity position is not encouraging. We are looking at options to improve liquidity. CFO Strinivas Vadlamani has resigned but we have not approved it yet. There are a few CAs playing various roles and they have come together to assess the situation. Nobody has been identified to replace the CFO.

 Q: What news of chairman and MD?
A: Many senior leaders had a conference call with chairman and MD within half an hour of receiving the letter. They have assured us support. We have not needed them yet; what we need is the CFO's assistance.

Q: What about liquidity?
A: We have verified the balance sheet figures such as receivables. On liquidity we need some assistance for business continuity. Cash on hand is not very encouraging.

Q: Service delivery?
A: We are ensuring that delivery of services happens. Forex for travel etc is taken care of.

Q: Do you anticipate any threat from any major shareholder? The issue is taking a political stance, do you have apprehension?
A: We have to deal with regulators in a transparent fashion. We (senior leaders) do not need to do this for financial reason; we are doing it for emotional reasons.

Q: Why did you not tell us the CFO quit earlier?
A: The resignation has reached today and it has not been accepted. Also, every one of us has a notice period and he will be back in office next week. We are in touch with him. 

Satyam today is completely different than what it was yesterday. We are driven today by the stakeholders' interests.

On timing of the press releases
We have a crisis on our hand. We are doing everything we can to deal with the situation expeditiously.  We are trying to cope with it in the best way possible.

Q: Are you looking for buyers?
A: We are exploring the option to induct new members, diluting equity and looking at a strategic investor. We need to transition. It can mean that we recast ourselves in a different model. We have to align income and expenses. We will have to operate differently. We need a new investment banker quickly.

Q: Where is Raju?
A: I am assuming he is in Hyderabad, but I do not know.

Q: You did take questions in conferences in the past along with Vadlamani. Why are you not able to answer on margins?
A: If you can recall, the only answers i had on margins was how to improve them.

Q: Regarding your whistleblower policy, irregularities were noticed earlier but not reported...

A: Can you be more specific? Can you site some instances? I cannot recall any.

Q: Who will be the new CFO?
A: There are many individuals who are capable in the orgn or bring external help, which will be decided by the board.

Q: How will you restore shareholder confidence?
A: I appeal to you to understand that the issue we are dealing with is huge. I have not dealt with anything like this in life. We will bring transparency for all stakeholders. But I reiterate I do not know what has happened.

Q: Will you restate results?
A: We have to announce Q3 results by the end of this month, and we will need to assess whether we need to restate. We are a highly matrixed orgn. The central processing office is the one that compiles the corporate results. We are all managing our business verticals. 

Q: Why has Raju not signed the letter?
A: Well, that letter was sent from his email to us.

Q: How did board give permission to buy Maytas cos as you have no money?
A: There are decisions made in board on the basis of data available. We take this data on face value. I do not want to make any more comments.

Q: Why don't you file a police complaint against Raju?
A: We need to look at the reality of Raju's statement first before coming to any conclusion.

Q: Do you really have 52,000 employees?
A: At the end of September it was 53,000 and there would be attrition by 2,000 and no new recruitment has happened this quarter.

Q: Do you know if you have the money to last through January?
Today I do not know.

Q: What is your current capacity utilisation? It seems you have a large bench from Raju's letter.
A: We will put that out with the Q3 results.

Q: What went wrong with Satyam? even midcap cos have 10% margin and you were at 3%. Please answer the question as an IT professional?
A: It could have been a number of things - revenues, expenses. I will only be able to answer after assessment. 

Satyam may axe 10k employees next month: Headhunters

Satyam may axe 10k employees next month: Headhunters

Press Trust of India / New Delhi January 8, 2009, 21:13 IST

With a big questions mark on its cash position and a minimum outgo on salary estimated at Rs 500 crore a month, Satyam may lay off over 10,000 employees next month, says a recruitment firm.

"It is most likely that Satyam will cut 10,000 jobs next month as the company is left with no cash to pay the salaries. The current fiasco is likely to put pressure on salaries, which may reduce by 10 per cent due to the surplus of about 20,000 people in the jobs market," Headhunters India CEO Kris Lakshmikanth told PTI.

Satyam interim CEO Ram Mynampati while admitting that the cash position is not encouraging, the company, however, has taken care of salary for December.

Lakshmikanth said till Tuesday evening there were about 7,800 people from Satyam who had posted their resumes on job sites and by Wednesday afternoon, it has gone up to 14,000.

The uncertainty about jobs is killingly painful for the 53,000 employees of Satyam, especially when the industry is going slow on recruitment.

Further, possibility of a takeover too looks distant as the accounting fraud done by the company would make it difficult for any firm to evaluate its correct market value, which is compounding the worries of the employees.

IT-BPO union Unites Professionals general secretary Karthik Shekhar said, "In case of any lay off at Satyam, we may take legal action."

"We have received over 7,000 hits since the news break. Yesterday, in one hour we have seen over 800 hits (no of people visiting the site) from Hyderabad. People have been enquiries on how the union can help them," Shekhar added.

Raju in Hyderabad, won't flee: lawyer | BSE to drop Satyam

Hyderabad: Beleaguered former Satyam Computer founder-chairman B Ramalinga Raju is in Hyderabad and has no intention to avoid the process of law, said his lawyer on Thursday.

“My client B Ramalinga Raju is very much available in Hyderabad. He denies reports appearing in a section of media that he is absconding or has fled from the country,” said S Bharat Kumar in a statement.

Kumar said Raju engaged his services to represent him in the legal matters pertaining to his statement to the Satyam board on Wednesday.

“Under instructions from my client, I communicate that Raju had made it very clear that he was prepared to subject himself to the law of the land and face consequences arising thereof. Should the need arise, Raju will make himself available for probe or any legal process by the agencies of the government," the statement said.

“At the cost of reiteration, I make it clear that Raju has no intention to avoid the process of law,” Kumar added.

Raju became incommunicado after sending a letter to Satyam board on Wednesday morning, and confusion prevailed after a TV channel reported that he had left either for the US or Dubai.

Raju is believed to have met nobody in the last two days. It is also possible that he might have handed over his letter to company officials before becoming incommunicado.

The Hyderabad police are reportedly trying to find Raju's whereabouts.

The Andhra Pradesh government has ordered a probe by crime branch. Police Commissioner B. Prasada Rao Wednesday said the police would act only if a shareholder or regulator lodges a complaint against Raju.

Some police teams were also sent to Satyam offices in the city to trace him but were unsuccessful.

A team of officials from market regulator SEBI (Securities and Exchange Board of India) arrives here Thursday to begin a probe amid speculation that police might arrest Raju after he confessed to Rs.7,000-crore fraud on Wednesday.

Satyam's looking: Wants strategic investor to bail it out

Hyderabad: The new management team of the tainted Satyam Computer Services is looking for a strategic investor to bail it out from the severe liquidity crisis it is facing in the wake of the financial fraud admitted by founder chairman B Ramalinga Raju, the company said on Thursday.

"We are looking for a strategic investor for raising liquidity. We have engaged an investment bank to shortlist the prospective investors. We will take a decision on it at the upcoming board meeting on January 10," Satyam interim chief executive Ram Maynampati said at a press conference.

Admitting that the current cash balance was not encouraging, Mynampati said efforts were being made to improve the liquidity position to ensure business continuity.

"Liquidity position is not healthy but we are hopeful of improving it. We have taken care of December salary and the first instalment of salaries to our on-site employees in the US has been processed. We will also be able to pay compensation for January," Mynampati asserted.

The whole-time director also revealed that chief financial officer (CFO) V. Srinivas has resigned, but his resignation was not accepted by the board and the new management team.

"The CFO sent his resignation letter yesterday (Wednesday). He has not been coming to office for personal reasons though he is in the city. The board has, however, not accepted the resignation. We will have an interim CFO from within the organisation. There are enough competent men in the company to take the job," Mynampati said.

Seeking more time to come out with details about the shocking disclosures made by Raju, Mynampati said the new team was engaged in day-to-day operations to ensure business continuity.

"This is a crisis of unimaginable proportion. We have not faced such a situation in our lifetime. It is only 30 hours ago that the events have began to unfold. We need more time to test the veracity of Raju's letter. We have not yet decided on lodging a criminal complaint against him (Raju)," Mynampati said.

The company is also on the lookout for new candidates for board appointments and is in touch with the regulatory and industry bodies to identify prospective candidates.

Following Raju's and managing director B. Rama Raju's resignations Wednesday, and that of four independent directors earlier, the nine-member board now has only three directors, including two independent directors - T.R. Prasad, V.S. Raju and Mynampati.

The interim CEO also said global clients have assured it they would stand by it and engage the company for software services.

"We have received support from our key customers. They assured us they would remain with the company in these challenging times. About 100 clients account for about 80 percent of the revenue," Mynampati said.

Stating that neither he nor any of the senior executives were aware of the events that unfolded Wednesday, Mynampati said client-servicing would continue with transparency to ensure smooth transition.

"Clients rely on Satyam for mission critical applications. We have reached out to our clients the world over and assured them of maintaining our service support as before," he said.

Denying media reports that employees were leaving the company, Mynampati said the company did not have any information on this.

"We have also reached out to our 53,000 employees to ensure continuity. They have assured they will remain with the company. Our aim is to ensure business continuity uninterrupted even during these challenging times," he added.